Leading digital SaaS banking platform Mambu and the consultancy Deloitte, have joined forces to research the BNPL market, resulting in five key findings that are critical to success in the marketplace.
The report comes amid skyrocketing demand for BNPL services, with the market projected to be worth $3.98 trn by 2030 - growing at a CAGR of 45.7%.
Both Mambu and Deloitte have identified five core components for Buy Now Pay Later success for banks and retailers.
Consumer demand for convenience and affordability is one of three factors driving the demand according to the report, as new figures from Deloitte reveal that 56% of users say the ability to test a product before making a payment is a key driver for using BNPL.
Other growth factors include widespread merchant adoption, as vendors look to reap BNPL benefits, such as increased sales conversions and average order sizes, as well as accelerated market traction during the pandemic.
New information released by Worldpay also shows BNPL amounted to 2.9% of global e-commerce in 2020, and is expected to reach 5.3% by 2025.
Strategic application of BNPL by Mambu and Deloitte
The new five-step guide encourages businesses to think strategically about adopting the new lending solutions and identifies step-by-step the building blocks for a competitive BNPL offering.
According to reports, the research also explores what is driving an industry predicted to be worthwhile and the practical steps banks and retailers can take to avoid being left behind.
Five key steps to BNPL success by Mambu and Deloitte
The ‘Deloitte and Mambu Guide to BNPL’ points to five central elements for businesses seeking to utilise a BNPL solution in the ever more competitive marketplace. Those key points are;
- Value proposition - defining and understanding what merchants and customers need and developing a model to solve their key pain points
- Technology and data - developing a tech stack with best-of-breed partners to enable real-time decisioning as well as the creation of next-generation solutions that deliver distinctive customer experiences
- Risk and compliance - designing a risk framework that provides a competitive edge, from in-built fraud detection and management to defining the risk appetite, model and strategy
- Skills and capabilities - investing in specialised talent in critical areas to compliment businesses’ existing teams as well as build their brand and differentiate their product in the market
- Go-to-market - bundling the offering within a businesses’ portfolio and bringing the minimum viable product to life
Speaking about the new data, Kunal Galav, Regional Director, EMEA Advisory at Mambu, explained, “Our report with Deloitte defines what BNPL success looks like and the practical steps financial and non-financial brands need to take in order to capitalise on the market opportunity. With fintechs already directing billions of revenue away from banks via BNPL services in recent years, incumbent players risk losing out if they fail to act now. BNPL will continue to erode unsecured retail lending post-pandemic, so it’s vital that financial institutions think strategically about if and how they decide to play a role in this new business line - we hope this guide will enable them to do just that.”
João Caldeira, Partner at Deloitte added, “BNPL is now a key sales and conversion driver for retailers and ecommerce providers. Merchants, if they have not done so already, are looking around for an embedded finance solution that can help them design BNPL experiences at speed and at low-cost. The bottom line is that it’s a new revenue driver and having the ability to quickly add seamless instalment-based payments at the point of decision can change a business.”
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